FMS - Fresenius settles litigation over Tricare program sees Euro175M positive earnings impact

2023-11-21 16:51:46 ET

German kidney treatment services provider Fresenius Medical Care ( NYSE: FMS ) on Tuesday said it had entered into a final settlement with the U.S. government over the Tricare program for the country's defense members.

As per the settlement, FMS will get a payment from the U.S. government which will have a net positive impact on its operating income of about €175M in Q4 2023.

"Fresenius Medical Care ( FMS ) had filed a complaint against the United States in 2019. This complaint sought to recover monies owed to the company by the U. S. Department of Defense under the Tricare program, for services on or before January 11, 2023," the company said in a statement .

Tricare refers to the U.S. uniformed services health care program that caters to active duty service members, active duty family members, National Guard and Reserve members and their family, and retirees.

The Tricare program also provides reimbursement for dialysis treatments and other medical care provided to members of the military services, their dependents and retirees.

"The litigation challenged unpublished administrative actions by Tricare administrators to reduce the rate of compensation paid for dialysis treatments provided to Tricare beneficiaries based on a recasting of invoicing codes. Tricare administrators had acknowledged the unpublished administrative action and declined to change or abandon it," Fresenius ( FMS ) said.

According to the company, the settlement agreement has resolved the dispute underlying the complaint and has concluded the litigation.

Due to the payment that the company will get under the agreement, Fresenius ( FMS ) now sees operating income to grow by 12% to 14% in fiscal year 2023, compared to an earlier forecast of low-single-digit percentage growth.

"In line with its disciplined financial policy, Fresenius Medical Care ( FMS ) intends to use the agreed settlement payment to reduce its net financial debt and therefore deleverage the balance sheet," the company added.

U.S.-listed shares of Fresenius ( FMS ) fluctuated after hours, last down 0.1% to $19.65.

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